Friday, February 3, 2023
HomeTechnologyHow to budget for a significant technology purchase?

How to budget for a significant technology purchase?

To keep inside your budget, be careful to order your needs

A significant information technology acquisition is comparable to purchasing a home or vehicle. Your wants and what you can afford may be different. The first thing you should do when considering purchasing new technology is to establish a reasonable budget.

Companies frequently underestimate the costs required and fail to account for important budget elements including implementation, maintenance, upgrades, and unforeseen issues.

Here are some ideas from the experts for determining a budget for an IT purchase:

Establish a price range:

According to Dean Lee, Head of eCommerce at 88Vape, “Obtain an estimate of the cost of the technology you are considering. You can establish a cost range by consulting with other businesses, trade groups, advisory boards, and industry experts you already work with, such as your accountant. If you employ an independent consultant to assist you with purchasing technology, they should be able to provide you with a ballpark figure for the cost of various systems based on the size of your staff and industry.”

2. Prioritize your needs:

“A comprehensive IT solution will usually cost more than what you can afford,” says Andrew Dale, the Technical Director at CloudTech24. “Everyone desires the best for their company, but buying a Ferrari when a Chrysler minivan will do is a waste of money. Your needs can be categorized into the following groups to help you order them in order of importance:

  • Critical
  • Important in a couple of years
  • Optional but not necessary

Seek technology that can both meet your immediate needs and provide you the flexibility to expand and add to them in the future. Consider purchasing cloud-based software rather than an on-premise application to save money. Be aware of how both solutions may affect data security and accessibility”, he continues.

3. Think about financing:

“You can require funding if your budget is insufficient to cover your needs. A business loan with a period that corresponds to the asset’s lifecycle is the optimal method of financing for an IT purchase. For instance, a loan of between three and five years is ideal because computer hardware normally lasts three to five years. When it comes time to upgrade the technology, you don’t want to continually be making payments on the loan,” advises Michael Lees, Chief Marketing Officer at EZLease

4. Incorporate all costs:

Zephyr Chan, Founder of Living the Good Life suggests, “When creating a technology budget, it’s possible to forget about some important costs, such as implementation and maintenance. Businesses frequently believe that a large new software system can be purchased, installed, and then used immediately. But that’s not normally how things go. For instance, it can take up to 18 months to establish and educate staff on an ERP system after purchase. Additionally, after a new software system is operational, annual expenditures for maintenance, support, and updates are usually in the range of 20% of the software’s original cost. Don’t forget to factor in how long it will take for staff to get adjusted to the new system. Budgeting for a brief time of lesser output may be necessary. The major change is seldom simple. Stress levels might rise and productivity levels drop, which affects the bottom line.

You should allocate a cushion in your budget—say, 7 to 10% of the whole cost—in addition to other costs.”

Marco Polo
Marco Polo is the admin of sparebusiness.com. He is dedicated to provide informative news about all kind of business, finance, technology, digital marketing, real estate etc.
RELATED ARTICLES

Most Popular

CATEGORY